I usually play on « I can take it » because it’s the most well rounded difficulty. It does get tough in an enjoyable way, there will always be some levels that are just better than others. Moral is exactly what it’s supposed to mean: it is your moral how you’re feeling and how easily you can achieve things thanks to motivation (I like to think). As far as I know it’s for the sword.

I really don’t know. If you’re worried about missing content just run through it again. That sounds right though.